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Mutual Funds Vs Other Asset Investment

There can be many different ways to invest our hard-earned money. People generally tend to invest in an asset class such as gold, Bank FDs or Real Estate believing that they are the safest and most profitable in the list of all investments. If we look at the latest data, we will find that mutual funds are yielding far better returns than other asset classes.

Why Invest in Mutual Funds?

1. Mutual funds are managed by highly qualified fund managers unlike gold or real estate.

2. Mutual funds investment allows investors to invest in a wide range of securities such as government papers, commercial papers, real estate, commodities, and even units of mutual fund schemes.

3. Mutual Funds allow more diversification of your fund as compared to real estate, gold, or fixed deposit.

4. Gold being a physical asset, carries the risk of theft.

5. Asset class carries a high cost of investment whereas in mutual funds one can start investing with ₹500.

6. You can liquidate your investment in mutual funds whenever you want. You can exit without any penalty after one year of your investment and pay an exit load of 1% if you withdraw funds before a year.

These are a few advantages of investing in mutual funds.

Now we’ll be understanding the returns that mutual funds and other asset class investments generate over a period of time.

1. Comparison Between Gold, Fixed Deposit, Real estate, And Mutual Fund

The above graph very clearly shows the growth rate of a mutual fund, Fixed Deposit Real Estate and Gold for 5,10,15, and 20 years, and very fairly we can conclude that only Mutual Funds generates the inflation-beating returns and grow your corpus.

2. Real Estate Returns in India

People in India have this belief that owning a property is the best investment we could ever make. In the past few years, the real estate market has been very volatile and has made some big investors incur great losses.

Moreover, most mutual fund schemes are highly liquid and you can exit at any point in time. Investment in real estate is comparably illiquid. Sometimes, real estate might give higher returns but it blocks the money for a very long period.

3. Returns Generated by Gold

Study shows that the growth from the year 1913 to 1931 in gold rate was flat and although in 2018 the gold price has increased radically, yet it is not able to beat inflation.

4. Comparison of return generated by FD and mutual funds

Fixed Deposit being a traditional investment product could never give you more than an 8% return. Returns from FD are taxable.

To conclude, the wise decision is to invest your money in Mutual Funds. Get rid of the old tradition to invest in FDs, gold, or property. Mutual funds have a wide array of schemes to suit your risk appetite and investment profile. Go for it!


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